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Surviving a crowd sale

Introduction

From the outside, some people see, that lot just got $7Million for nothing. From the inside of the bubble life is very different. Lets go back a bit though. MaidSafe is an enormous proposition, replace all Internet services, redo the design from the network up to the person. Put individuals in complete control of their digital life. No small feat and extremely difficult to do correctly. This took many years (8) and almost $5million on funding from mostly friends and family as well as local people who came to hear of us. This is a huge responsibility, if we fail it’s not just lost opportunity, it is lost friends and disappointed families, most importantly we believe the world loses an opportunity for freedom of it’s people. A big difference from faceless money, this is support from people who care about us and the project. Of course some greed did slip in, not much, but enough to cause us delay and frustration at times. Our investors though are amazing and have shown immense patience in a project we thought we could tackle in a year or two, eight years later we release it to the world. A huge step, some say brave, but entirely logical in any case.

Background to the sale

MaidSafe has a goal that is pretty huge, so large a select few investors we have would not talk of it. One of our largest investors told us repeatedly you cannot go and pick a fight with the big guys. I never said to much, but knew the whole time it was not about picking fights, we were just going to replace those services, every one of them. It was not about beating big guys, it is about privacy security and freedom for all, that’s it. A very small number of later investors would say, release some small utility and focus on that, i.e. wanting to jump off the bus and see where we were, perhaps even sell out to a large company for a few bucks and get a return. These things are very limited, but they exist and are a constant distraction for sure. It is understandable as many of our investors have been backing us for 8 years, interestingly those early investors, just support us, that all, they totally believe in us and watch us work non stop through the night. MaidSafe need to prove to everyone that this was not a get rich quick buy for a £1 and sell for £2 scheme, this was a world changing event if we did it right. Returns follow value and this is my absolute belief, otherwise rob a bank, it’s faster and more likely to succeed.

So MaidSafe needed the masses to shout about change and demand we succeed. It demanded a following of early adopters who could see the goals and tell everyone that this could change their lives. We needed smart backers and more importantly, much more importantly MaidSafe had to give up control of its digital assets to the world. Time to release the thing to the community and have legions of followers and supporters. The world was moving on and the need for project SAFE was overwhelming.

Go for it

In this brave new world where many have gathered we found great support. The Master Protocol seemed like the vehicle to issue a smart property, a bitcoin VC BitAngels also found us and were exceptional at offering advice and planning. So we set a date and moved towards that date with vigour. This allowed us to introduce the currency of the network that dated back to 2006 when the design was first envisaged. So this was not going to be a step forward, this was us leaping onto a world stage.

The conduit to the community for us was the developer mailing list and Google Hangouts. This list was full of supporters, ideas and exceptional honesty. A great place to work from. In the background we were finding out the Master Protocol was almost ready and they were working hard to meet our deadlines (software projects and deadlines, always include pressure). The planning of the sale was unfolding in front of us as well.

Plan for it

We decided to set a price of 17,000 MaidSafeCoins per bitcoin. This was to say to everyone, we will take the risk of fluctuation and if BTC fell then we pay the price, if it increased during the sale we would benefit. Either way people could know exactly what they were getting. We spread the word, all our staff started to buy BTC for this sale, the excitement was growing. We knew MSC could be used directly and automatically issue MaidSafeCoins, this was how the protocol worked. This gave us cause for concern, but experts in the field reassured us the MSC part of sale would be minimal. This was comforting, but relied on us using advice and not setting a rule (this was our big mistake). BTC purchasers would be handled manually in the back office with us actually doing the conversions and using the MSC loan account to make the actual MaidSafeCoin purchase, we got set up for night shifts during the sale to do this.

Days before the sale we found out the loan amount of MSC would not cover the bitcoin part of the sale, this floored us. A date was set, we had done loads of meetings, talks and interviews stating this. Was MaidSafe going to fail in such a huge step? No we were determined not to. It was suggested we could set the MSC -> BTC rate at 0.3 or 0.4 which we read and nearly collapsed. This was 3 or 4 times market value, how would this be possible. We were convinced to set a rate of 0.2 and the sale could be funded to make sure BTC holders were covered. Again it was stated that MSC would not be above 25% of the sale.

We were comfortable with this explanation. Just before the sale we set the price of MSC at 0.2, which was actually 2X the current market price, why do this? Well we had to cover the BTC and all information we got made it clear this was the only way. We were also convinced that as people seen the value of MSC as a vehicle for smart property then this price would be eclipsed very quickly.

We then found out about the reward scheme, a rolling discount that would incentivise early purchasers and kick the sale off. This had been previously done and was a success. We agreed it would be a good thing to do this and anyway it is how the protocol worked.

Press the button

09:38am April 22nd 2014, we pressed the button and the sale address became live. We had blockchain.info on a screeen in the office and used this to track the sale. It went mental almost immediately, in less than an hour there were hundreds of thousands of dollars worth of purchasers, mostly small. We were amazed. I had to rush home to make my BTC purchases for my friends. I rushed.

At home the blockchain.info was going even faster, excitement turned to worry, this was too fast. That sounds crazy, but it does make you nervous when this happens, I cannot explain why, but it does.

On returning to the office, myself and some of the team went outside for a sit down in the sun. Then people rushed out of the office to us saying, the MSC part of the sale had gone ballistic, numbers on the different MasterCoin sites were all different, one saying the sale was over. This was bad, all BTC purchasers including us were now locked out and the coins were all purchased. Euphoria to the death of the project in seconds.

Staring into the Abyss

Ok it was over, we had screwed up and screwed all our supporters who were BTC holders. We had bet the business on this sale and spent months working towards it, sacrificing everything to make this happen. Time for action!

We got on to the Master Protocol guys in the USA, to figure out where we were. They were convinced only 50% of the orders we had seen on an exchange were real. What? we could still save the day. Stop the sale I said and then realised we could not as this would stop any more MSC including the MSC we need to convert for the BTC purchasers.

Stop MSC inputs from any more people then! This was also not possible, it was going mental.

OK, remove the MSC address from the site and put up a message this MSC part was finished. All our advice was down a toilet somewhere and we had taken it as fact, what a stupid move on my part.

We would halt everything and use the MSC loan to process the BTC purchasers, we owed them this and needed it to happen.

N.B. The Master protocol team are working out many of the issues we had to deal with, both technically and politically. This is a frank and open discussion and great to see.

Climb out of the fire

So we managed to figure out the amount of MSC that had been used so far was circa 50%. We could still accept BTC. I then said, lets buy all remaining MaidSafeCoin with the loan fund and close this sale technically in the background. This meant the BTC people were protected and we could take our time processing the purchases. The manual process was excruciating to say the least and this amount of transactions was going to introduce error.

In steps the Master Protocol team and our devs, between them they created a set of tools to automate the process. The MSC guys created a test smart property and tested overnight. It was a success, so three days after the sale completed we were able to make all of the transfers. A few last minute purchase attempts got locked in the master blockchain and these were handled after protocol correctness discussions and debates.

The hard part

The end result was going to happen anyway. MaidSafe’s project became free and a movement is now underway. We are still stunned in MaidSafe as the whole thing was surreal. Yes we ended up with way less actual liquid cash to allow us to achieve some early goals, but it was never about money. It was never about taking from people, this was all about giving. Many people could not understand that and a tiny amount of people made up some stories that were so incredible they seemed insane. These stories caught fire and had otherwise normal people perpetuating stomach wrenching stories about MaidSafe, it’s goals and supporters.

This was actually more difficult than I thought it would be, we are so used with open honest communications and try hard to make sure everyone sees us in a ‘warts and all’ manner. We even had a few on our mailing list that got banned, these people admitted trying to manipulate the market etc. they were also added as the ‘expert witness’ testimony to the weird and bizarre stories that were being manufactured. A person who started one story then bragged of ‘getting in’ and getting some MaidSafeCoins.

It is a strange world and shows again why a privacy enhancing, free and secure network is required. The education of people is so important. The madness of these people is the same madness that causes many to harm many. These memes that are actually very false is where persecution starts, that can often end up in a situation where people end up taking up arms against each other. It really is amazing to watch, initially I thought it was funny, then when these stories grew it made me feel very sad that the connected world is not smarter just yet. This is something I will continue to try hard to remedy, we have to. We just have to!

The end result

One thing that struck us in house was the supporters on our mailing lists and forums. They hardly took any notice of the crazy stories and continued on, planning and working out ways to create remote development groups and meetups. This was the opposite of the feelings earlier, this was immense pride and a wake up call. What we just did was unbelievable and a huge step to freedom. Project SAFE supporters were doing something important here. First they obviously thought, I hope, none of that nonsense is true and when they seen it was not gave it no thought. The other thing I hope was the case was that it did not matter. Project SAFE was not MaidSafe, it was not David Irvine and it was not bothered by dafties. Something very much more important had just happened, we achieved our goal. Project SAFE now was firmly community property, we were secondary as we wanted to be.

So the oodles of cash, the pile of loot, what happens to that? This part is easy, it is much more equivalent to $3M in todays cash if we were to convert it, so there is a long term position required. It will keep the MaidSafe staff paid and housed for 3 years as stated. The rest, all of it will be used to get the community up and running, so we give it away. No we invest it in our future! We had hoped the foundation would have enough to buy the land it’s on and build a new building, that may still happen, but only after we can be sure the community is up and running first. A lot will depend on the liquidity of the crypto we took in. I know we will make sure it is accounted for penny by penny (well it has to be anyway) and that it makes sure project SAFE is not only real, but that it accelerates onto the world at a significant pace. I know we will make people proud and I know we will at least start to make the world change for the best, it’s our duty and now we share that with many more like minded owners of project SAFE.

I was asked in an interview recently what it felt like, this crowd sale? I replied

If you want to feel 1mm tall, do a crowd sale for something you care about!

Yes I would do it all again, and I hope many do, we broke the water for others and found some holes along the way. We are working with the Master Protocol team to make sure no other project falls down them, but we did it! and man did we do it. It was and still is unbelievable and surreal. Another stage in the project SAFE story is now complete, the next steps are likely to be dramatic, I cannot wait.

24 comments on “Surviving a crowd sale”

Thanks for filling in the gaps David. You’ve been very kind to people who nearly screwed years of work by you and the team.

How did you let this happen? IMO because you demonstrated one of the reasons that project SAFE will, and *must*, succeed – you trust people. You trust human nature. This is your most inspiring and endearing quality for me.

@E – you realise MaidSafe has *no connection whatsoever* with the bitcoin protocol?

Admittedly the Mastercoin protocol was used for the crowdsale, but when SAFE Network launches all MaidSafeCoin will be converted one-to-one to SafeCoin and even this connection to bitcoin will disappear.

Its a shame you didn’t get as much money as you could have, but you clearly have plenty of supporters who will hopefully help to provide what you need to move this project forward.

I nearly didn’t buy in the crowd sale because I’ve never liked or trusted the Master Protocol – it seems to me to be more about protecting Bitcoin from competitors by building things onto it that don’t really fit there rather than actually wanting to provide a quality product.

In the end I did buy a small amount (all I could afford) with BTC and I really appreciate the stress and effort you went through to make sure buyers like me were taken care of. You should feel 10 foot tall not 1mm.

I can’t help but give you the benefit of the doubt, but I’d like you to join me in a collective “Fuck you” to those mastercoin holders who have just used your up as a way to exchange their coins to Bitcoin. If they think we are stupid enough we can’t see them systematically dumping then they are the stupid ones. Anyone can see what’s happening, and it could destroy your credibility before you are even off the ground

I’m a Mastercoin investor way before I even heard about Safecoin and Maidsafe. The only reason I’ve heard about Safecoin and became an investor was because of Mastercoin.

I’ve missed the opportunity to buy Safecoin with Mastercoin and ended up buying it with Bitcoin.I was actually a bit disappointed this fundraising didn’t take place exclusively in Mastercoin.

Some of the people who’ve commented here have no clue about Mastercoin. An important amount of cash was invested into it and project has some big backers. It was the first initiative to establish a decentralized exchange, all other similar clone projects came after, started by ex Mastercoin members. Mastercoin has a good 1st mover advantaged though.

Mastercoin is not about “using Bitcoin’ or giving value to “Bitcoin”. They could have easily went with a separate chain but there are advantages to using Bitcoin as it is an established secure network.

Another poster is wrong when claiming Safecoin will become disconnected from Mastercoin. Safecoins will trade via the Master protocol in decentralized fashion. This connection won’t go away.

“Another poster is wrong when claiming Safecoin will become disconnected from Mastercoin. Safecoins will trade via the Master protocol in decentralized fashion. This connection won’t go away.”

This part is actually not going to be the case for us. MaidSafeCoin is an intermediary coin. So it will vanish after a while (swapped 1:1 for safecoin). That is no bad thing, but proves yet another valuable use case for mastercoin.

There are a load of great MSC investors out there and many I am sure did buy into the sale. Some thought we should be all MSC, but that is not possible for our goals. MSC has a great future and I think we showed it in action and next time it will be even better. The discussion paper is a great example of a project that will move forward and we are helping as much as we can with it. For us there were issues in the balance and capability. These issues have highlighted a requirement that is being taken seriously and that is great.

Welcome aboard though, this is going to be quite a movement by the looks of it.

Its absurd to state that if a project is “older” and is backed by “big guys”, time and effort, then it deserves to wildly succeed. In a free market, lots of good projects compete for success, and some are left behind. Others suffer from bad luck or simply bad timing. Mastercoin dont deserve any special badge that put it ahead its competitors. Because yes, there are competitors.
The Mastercoin ecosystem deceived David and took advantage of the IPO. Full stop. They played their best to make a 100% profit in 8 hours. They tried to get a 200 or 300%, but it wasnt possible. Not that they didnt tried. And it was not the reddit community, it was really top high guys in the Mastercoin hierarchy. “Reputable people”.
This was not about the Mastercoin protocol, the decentralized internet, Bitcoin or the cryptocoin community.
It was about money. Only money. And with that move, thats all i need to know about Mastercoin.
At least now that part is over and from now on is just only about SAFE.

Mastercoin recently changed the way they award bounties to their own devs from Mastercoin bounties to Bitcoin bounties so there won’t be much incentive for the devs to seek ways to cash out as might have happened during this Maidsafe sale. It’s also a good way to incentivize developers to stick around and not go start competing projects. With Bitcoins payments it’s much easier to cash out if that’s what they wish due to higher liquidity. Mastercoin Foundation has a decent Bitcoin stash which they can use for such purpose.

One of the issues Mastercoin is less liquid is due to difficulty of being adopted by regular centralized exchanges, which in turn caused other issues.

You are wrong in blaming the crew for this dynamic. It was not something done in any premeditated way but something that arouse from the dynamic described above.

“This part is actually not going to be the case for us. MaidSafeCoin is an intermediary coin. So it will vanish after a while (swapped 1:1 for safecoin). That is no bad thing, but proves yet another valuable use case for mastercoin. ”

But how will I be able to sell the final SafeCoin if I want to do so? On what exchange will it trade? Will it go private and not listed on any exchange?

safecoin will be available on many exchanges. It is a bitcoin like cash system. The MSC guys may be able to peg safecoin, we are not sure and we are not sure it is required. It is a currency in itself though.

Won’t you like the new SafeCoin to be traded on a decentralized exchange? It would be kinda` weird to have SafeCoin trade on normal centralized exchanges while coin itself and what it stands for is all about decentralization. Won’t that send a mixed message?

safecoin will de completely decentralised in every way. Exchanges included 🙂 It is something we are talking to MP and others about. I would not imagine it on a centralised exchange. I am not a fan of proof of stake either. safecoin == cash bitcoin == ledger it’s really that simple I think. jump on maidsafe.org and find out way more though.

Hi, david, normally in traditional way, cash always means fiat currency, which devalues in long term. And it has the tendency of inflation. Cash can not store value. I think safecoin has the function of cash like cash flow. If the network of maidsafe has huge success, it can benefit the bitcoin as value storage, because of the huge Pioneer advantage of bitcoin. I am afraid that, compared with that of bitcoin, the value of safecoin has to be devalued.

@metaquestions hi, david, I really applause your work. I see this amazing work cause I believe the concept of decentralization, privacy and freedom. I have read your whitepapers, to be honest, it is hard to understand. Can you recommend some book to study code? or any other background knowledge to better understand how this system worked… thanks a lot.

Thanks you. We are testing a documentation system just now as we realise this is an area of improvement. That should help. The wiki on github has some details, but not nearly good enough.

As this is all pretty new the books are limited that could help. I am not really aware of any, unfortunately. maidsafe.org is starting to be a great place to meet and chat about the parts of the system and projects that can run on it.

[…] into a few walls.  Irvine wrote a long candid review of the process in a blog post on surviving a crowdsale.  To my great surprise, he says that if he were to do it again, he would still use […]

[…] crashed into a few walls.” Irvine wrote a long candid review of the process in a blog post on “surviving a crowdsale.” To my great surprise, he says that if he were to do it again, he would still use […]

[…] crashed into a few walls.” Irvine wrote a long candid review of the process in a blog post on “surviving a crowdsale.” To my great surprise, he says that if he were to do it again, he would still use […]

[…] crashed into a few walls.” Irvine wrote a long candid review of the process in a blog post on “surviving a crowdsale.” To my great surprise, he says that if he were to do it again, he would still use […]